Czech Wealthy Magnate Secures PM Role, Pledging to Disentangle Business Holdings

Entrepreneur Andrej Babis has been sworn in as the Czech Republic's new head of government, with his government slated to be appointed shortly.

His appointment came after a fundamental condition from President Petr Pavel – a public assurance by Babis to relinquish command over his sprawling food-processing, agriculture and chemicals holding company, Agrofert.

"I vow to be a prime minister who defends the interests of every citizen, at home and abroad," declared Babis after the ceremony at Prague Castle.

"A prime minister who will work to transform the Czech Republic the finest location to live on the entire planet."

Lofty Ambitions and a Pervasive Business Presence

These are lofty ambitions, but Babis, 71, is used to thinking big.

Agrofert is so deeply embedded in the Czech commercial ecosystem that there is even a specialized application to help shoppers steer clear of purchasing products made by the group's more than 200 subsidiaries.

If a product – for example, Viennese-style sausages from Kostelecké uzeniny or packaged bread from Penam – falls under an Agrofert company, a thumbs-down symbol shows up.

Babis, who was formerly prime minister for four years until 2021, has moved rightward in recent years and his cabinet will include members of the right-wing SPD party and the Eurosceptic "Motorists for Themselves" party.

The Commitment of Withdrawal

If he honors his promise to withdraw from the company he established, he will no longer benefit from the sale of a single Agrofert product – from frankfurters to fertiliser.

As prime minister, he asserts he will have no information of the conglomerate's economic status, nor any ability to affect its prospects.

Governmental decisions on public tenders or subsidies – whether Czech or European – will be made with no consideration for a company he will have severed ties with or profit from, he further notes.

Instead, he proposes that Agrofert, valued at $4.3bn (£3.3bn), will be placed in a trust managed by an independent administrator, where it will remain until his death. Then, it will be inherited by his children.

This arrangement, he stated in a online address, went "exceeded" the demands of Czech law.

Clarification Needed

The legal nature of this trust remains unclear – a domestic trust, or one established overseas? The legal framework of a "blind trust" is not recognized in Czech legislation, and an army of lawyers will be necessary to design an structure that works.

Skepticism from Anti-Corruption Groups

Watchdog organizations, including Transparency International, continue to doubt.

"Such a trust is not the answer," stated David Kotora, the head of Transparency International's Czech branch, in an interview.

"The divide is insufficient. He undoubtedly is acquainted with the managers. He knows Agrofert's holdings. From an position of power, even at a EU level, he could theoretically intervene in matters that would impact the sector in which Agrofert functions," Kotora cautioned.

Extensive Influence Beyond Agrofert

But it's not just food – and it's not just Agrofert.

In the eastern suburbs of Prague, a private health clinic towers over the O2 arena. While it is owned by a company called FutureLife a.s, that company is controlled by Hartenberg Holding, and Hartenberg Holding is, in turn, majority-owned by Babis.

Hartenberg also operates a chain of fertility centers, as well as a florist chain, Flamengo, and an underwear retailer, Astratex.

The influence of Babis into every facet of Czech life is wide. And as prime minister, for the second time, it is poised to become more extensive.